Management Science II Dr. S.Bharadwaj

Indian Institute of Technology Madras

MODULE 1

Segmentation,Targeting and Positioning

• Segmentation, Targeting and Positioning Definitions

• Segmentation Variables • Evaluation of Segments • Summary

What is segmentation, anyone? • What about targeting and positioning?

• Segmentation is the process of grouping people or organizations within a

market according to similar needs, characteristics, or behaviors

Dividing the market into groups

• an entire market rarely has the same tastes and preferences • it is difficult to handle all preferences too • Mercedes Benz, for example (only high-end)

Targeting is the actual selection of the segment you want to serve the target market is the group of people or organizations whose needs a product is specifically designed to satisfy Positioning is the use of marketing to enable people to form a mental image of your product in their minds (relative to other products)

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Management Science II Dr. S.Bharadwaj

Indian Institute of Technology Madras

STP Marketing is the name of the game

• The days of “one size fits all” are over • No longer can one say “You can have any colour as long as it is black” • Need to follow the “horses for courses” policy - no more mass marketing • Moving towards mass customization in fact • Levi’s Personal Pants • National Bicycle Company

How to segment a market? • On what basis/bases? • What are some criteria/variables?

Segmentation - Variables

Demographic Segmentation Age, Gender, Income Age

• Bicycles

• Disney’s Cartoons

• Pension Plans, Retirement Funds e.g.

• LIC Gender

• Hasbro Toys

• Cindy for girls, GI Joe for boys

• Gillette

• Razors for men, women

• most cosmetics, perfumes etc

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Management Science II Dr. S.Bharadwaj

Indian Institute of Technology Madras

• Revlon, Ralph Lauren

Income

Toyota • Lexus for high end

• Camry for the middle of the roaders

• Corolla for low end HLL soaps - Dove for high end, Hamam for low

And so on

• Income is possibly the most common basis for segmentation

• Other Demographic Variables Include Religion, Ethnicity, Occupation,

Generation (Baby Boomers, Generation Next, Yuppies) and so on

Geographic Segmentation

• snow boots in the Northern part of USA

• Of course, all International Marketing is done on a regional(geographic

basis)

• The “Same” Honda Accord is different in different countries !

• Most MNCs vary their products according to country

• special tires in the Middle East

• Taj: AP - hot food, Kerala - more coconut and so on

Behavioral Segmentation

• On the basis of occasions, product usage, benefits sought, brand loyalty

Occasions

• Y2K Cruises

• Hallmark Cards

• a greeting card for every occasion - Valentine’s Day Card, Deepavali

card

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Management Science II Dr. S.Bharadwaj

Indian Institute of Technology Madras

Benefits Sought

• there are certain specific benefits sought - example would be Colgate Tartar Control for Tartar

User Status

• Non-Users Vs Current Users

• Credit Card Companies

• new card vs another card

• Blood Banks, entry level cars/bikes

Usage Rate

• Heavy Users Vs. Light Users

• The Beer Market is a classic example

• Miller Lite, BudWeiser all target the heavy user

• Bajaj M80 could be another candidate

Psychographic Segmentation

• Lifestyle products like Raymond

Evaluation of Segments

Having segmented the market, which one to choose? What are the criteria? Is there potential sales, growth and profit ? • Big Emerging Markets (BEMs)

• China, India, Brazil etc

Potential Competition and Cost • is it too much ?

• Imagine going against Microsoft in the PC OS market for someone like

Unix

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Management Science II Dr. S.Bharadwaj

Indian Institute of Technology Madras

• Tata Indica was smart in battle Vs. Maruti

Potential Risk

• environmental

• doing business in Iraq now

• Or even Kashmir

Is it compatible with my current business ?

• Mercedes going “downscale” with E-Class

• will it hurt the “Mercedes” brand ?

• will it cannibalize my existing brand ?

• Air India starting a budget airline?

Summary

• STP Marketing is highly important

• Consumers are very finicky and want to feel special

• From mass marketing to mass customisation

• Segmenting is important

• let Bajaj Chetak, Ambassador, Fiat, Maruti 800 even be examples

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